Richmond and Wimbledon Business Owners: Is Your Corporate Tax Structure Working Hard Enough?

Richmond, Wimbledon, Putney and the broader South West London corridor are home to a dense and diverse community of owner-managed businesses — from professional services firms and technology companies to property businesses and family enterprises. Many of these businesses have grown significantly in recent years, and their owners are increasingly facing complex tax questions around corporate structure, business sales, profit extraction and succession.

Specialist corporate tax advice — delivered at the right time — can have a transformative effect on both the tax efficiency of a business and the personal wealth of its owners.

Corporation Tax — The Basics Have Changed

For South West London businesses turning over more than around £250,000 in profits, the corporation tax rate is now 25% — up from 19% in 2023. For businesses with profits between £50,000 and £250,000, a tapered rate applies. This increase has made profit extraction planning and investment timing decisions more important for SME owners than at any point in recent years.

Profit Extraction Strategies

For owner-managed businesses in Richmond and Wimbledon, the most tax-efficient way to extract value typically involves a combination of salary, dividends and pension contributions. The optimal mix depends on the business's profit level, the owner's personal tax position, and longer-term plans for the business.

Salary and Dividends

The combination of a small salary (up to the National Insurance secondary threshold) and dividends remains the most widely used extraction strategy. However, the dividend allowance has been cut significantly — from £5,000 to £500 — meaning that dividend income above this level is now taxed at 8.75% (basic rate), 33.75% (higher rate) or 39.35% (additional rate).

Pension Contributions

Employer pension contributions made by the company are deductible for corporation tax and do not attract National Insurance. For business owners in their peak earning years, maximising pension contributions — particularly using carry-forward of unused annual allowances — is frequently the most tax-efficient form of profit extraction available.

Business Sales — Planning for Exit

Many Richmond and Wimbledon business owners are at the stage of thinking about selling or transitioning their businesses. The tax on a business sale is often the largest single financial event in an owner's life, and early planning can make a very significant difference.

Business Asset Disposal Relief (BADR)

BADR reduces the Capital Gains Tax (CGT) rate to 10% on the first £1m of qualifying gains on the disposal of a business. The relief has strict qualifying conditions that must be met for at least two years prior to sale — meaning that it's important not to leave planning until the deal is imminent.

Pre-Sale Restructuring

Many businesses benefit from a restructuring before sale — separating out non-trading assets (such as investment property or excess cash), creating a holding company structure, or carving out a division to be retained by the seller. These transactions require advance HMRC clearance and careful planning to ensure they achieve their intended tax effect.

Earn-Outs

Many business sales in the current market involve an earn-out — where part of the consideration is deferred and dependent on future performance. Earn-outs have complex CGT treatment that can significantly affect the tax cost of the transaction. Specialist advice before agreeing to an earn-out structure is strongly recommended.

R&D Tax Credits for South West London Businesses

Many South West London businesses — particularly in the technology, engineering and professional services sectors — carry out activities that qualify for R&D tax credits. The R&D tax relief regime changed significantly from April 2024, with a new merged scheme replacing the separate SME and RDEC regimes. Ensuring that R&D claims are properly prepared and maximised is a significant opportunity for qualifying businesses.

SDLT on Business Premises

For Richmond and Wimbledon businesses acquiring commercial premises — whether freehold or leasehold — Stamp Duty Land Tax (SDLT) is a significant cost. Specialist SDLT advice can identify planning opportunities and ensure that available reliefs are correctly claimed.

Newshams Tax Advisers — Your South West London Tax Partner

Newshams Tax Advisers works with businesses and their owners across Richmond, Wimbledon, Putney, Fulham, Kingston and the wider South West London area on the full range of corporate and personal tax matters. From day-to-day tax efficiency to complex transactions and business sales, Newshams Tax Advisers provides pragmatic, commercially focused advice.

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To discuss your business's tax position, please get in touch with Newshams Tax Advisers. Initial discussions are informal and entirely without obligation.